As you are probably already aware, The Fed, unsurprisingly, raised short-term interest rates this week for the first time since 2018 in order to fight inflation. The Fed raised the Federal Funds rate by 0.25%, from nearly zero, and says their new target range is between .25-.50%. However, in the Fed’s forecasting it appears at least 11 more rate increases will occur by the end of 2023, for a rate of 2.8%. That would be the highest since March 2008. This means that the cost of loans has gone up and will continue to increase.
Experts are saying that while growth is expected to slow, it should not lead to a downturn, or a recession. The Fed believes the economy is strong enough to handle it and that it is worth it to try and curb inflation, stabilize prices, and have a better labor market. I guess we’ll have to wait and see.
To add insult to injury, gas prices continue to rise and some supply chains are expected to be further constrained by the port closures in China (due to the most recent COVID-19 outbreak there). As has become the norm in these times, the outlook remains uncertain.